Securities class action dismissal
On behalf of longtime client Spirit AeroSystems Holdings, Inc. (“Spirit”), our attorneys successfully obtained a dismissal with prejudice in a securities class action against the company and four current and former Spirit executives. Spirit is one of the world's largest non-OEM designers and manufacturers of aerostructures for commercial aircraft.
In the third quarter of 2012, Spirit recognized a $590 million forward loss on certain manufacturing programs. In response, the plaintiffs filed a securities class action accusing Wichita-based Spirit and four of its executives of deceiving investors. The complaint alleged that Spirit and its executives made a number of false and misleading statements that artificially inflated Spirit’s stock price before the company recorded the forward loss.
On May 14, 2015, US District Court Judge Eric Melgren dismissed all of the securities class action claims. In making its ruling, the court agreed with our attorneys’s arguments and granted Spirit’s motion to dismiss. The court further denied plaintiffs’ request to file an amended complaint.
The court found Spirit’s statements were not material because they were vague and general statements of corporate optimism. In addition, the court found that Spirit did not have a duty to disclose information about production problems and cost overruns because they had not made any materially misleading statements that would give rise to such a duty.
Although the complaint could have been dismissed on the issue of materiality alone, the court additionally found that the complaint failed to plead that the individual defendants acted with any intent to deceive investors or acted recklessly in making statements to investors.
After carefully and extensively reviewing the complaint and oral argument, Judge Melgren found that the alleged false statements were not material and that the complaint failed to raise a strong inference of scienter.
“We are delighted with Judge Melgren’s decision, which was very thorough and well-reasoned,” said Litigation partner Phil Geraci. “This is a large win for Spirit, and our client is very pleased with the result.”
Our attorneys began working with Spirit nearly 10 years ago when the firm represented Spirit and Onex Partners LP in Spirit’s acquisition of Boeing’s major aerostructures manufacturing facilities in Wichita, Kansas and Tulsa, Oklahoma. Our attorneys also represented Spirit in its 2006 initial public offering and listing on the New York Stock Exchange as well as other transactions over the years.